Foreign participation key to gas sector development: ADB

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FE Report
The Asian Development Bank (ADB) has identified five key challenges for Bangladesh as far as the development of its gas sector is concerned.
Gas exploration, development, and enhancement of production capacity effort need major acceleration, it said.
"The estimated capital required is $1.5 billion for every a billion cubic feet per day (bcfd) production. This must be secured along with the necessary know-how to produce from more complex deposit structures to be tapped in the future," it said in a study.
Such massive capital mobilisation of fund and acquisition of know-how would require increased foreign participation in the market, the multilateral funding agency mentioned.
The study, however, suggested that the government must enable an investment recovery structure, which could attract IOC (international oil company) investment and provide optimal benefit to the country.
It has also suggested that gas use had to be stimulated warranting maximum feasible efficiency in gas energy recovery.
The monetisation of gas should be optimised to provide maximum long-range value to the country.
The study found that the power sector, based on the most modern combined cycle gas turbine technology, became the dominant user of natural gas.
"It is recommended that, under the current limited supply and delivery system, priority be given to new users with maximum energy recovery efficiency," it said.
Gas pricing needs to provide requisite assurance to the domestic product on and delivery systems of sufficient funds for sustainable growth and reliable service, it said.
Pricing is also an important element towards attracting IOCs into the market, it said.
"It s recommended that gas pricing be restructured within the next 5 years to closely mirror the costs of equivalent replacement fuel and reach parity with liquid fuel," it revealed.
Any subsidies the government determines necessary for socio-political reasons must be carried out directly by the government at the location of the delivery-user interface.
The Bank said natural gas resources of Bangladesh can and should provide a major element toward achieving the country's Millenium Development Goals (MDGs), provided a system of governance is implemented based on equitable distribution of earned resources to the individual links of the gas-to-energy value chain.
It also suggested that the role of Bangladesh Energy Regulatory Commission (BERC) be elevated to the position of main system auditor and coordinator, with the concomitant objective that major decisions not be related to tactical political goals.
Over time, a complete unbundling of the gas sector system should be carried out, with Petrobangla becoming the principal trading point in the system, it observed.
The government will remain the constitutional body defining long-term strategies of the energy sector while avoiding interference in routine operations, decisions, and regulatory activities, it added.